In metropolitan areas, electronic fund transfer systems allow bank customers to transact business at all hours of the day and from many locations. However, one of the problems which is encountered is with security. Normally, a bank has centralized data processing and all automatic teller machines (ATMs) are linked to this computer (CPU) by dedicated communication lines, such as telephone or microwave links.
Frequently, for purposes of security, the ATM is installed within the walls of the bank. This is done for two reasons. First, the ATMs have a lot of money. Second, access to the ATMs is strictly controlled, including access to the communication links. Thus, there is not only a requirement for physical security on account of the money involved, but there is also a requirement for communications security because communication devices grant access to the money. It is widely recognized that communications security is one of the weak links in ATM banking. In order to improve communications security, most banks have adopted data encryption between the ATM and the CPU. The problem with data encryption is that it makes system maintenance more complicated and makes the ATM machines themselves more cumbersome. Furthermore, a new security problem is created, namely security for the encryption system. The security for the cryptographic devices must be almost as great as for the ATM itself, since these devices contain the clear data. A solution is to build such devices into the ATM so that data emerging from the ATM is encrypted.
While encrypted ATMs are now used in large metropolitan areas, electronic fund transfer systems are not used in smaller isolated communities where a communications link to the CPU in a metropolitan area is quite expensive and in many instances prohibit use of ATMs. Many such communities still use modernized versions of paper passbook banking and for the foreseeable future it appears that this method of banking will remain as the primary method of doing banking business. In these communities, as well as in metropolitan areas, it would be desirable to revert to more simplified ATMs, namely ones without expensive telecommunications links to a CPU which require data encryption devices. Accordingly, it was an object of the invention to devise a banking card for facilitating electronic passbook banking in cooperation with an ATM, not connected to a remote CPU and without an external data encryption system.